~ Investment Strategy

Philosophy, Politics, Economics, and Magic

For many years now, and also at university, I have studied the three subjects that still exercise my mind: philosophy, politics and economics. Philosophy came first, beginning as the arrogant delight of a twelve-year-old boy who found he could perplex his Scripture master with clever questions. As time went on, the delight receded and the questions grew in importance. They hinted at deep answers and secret knowledge, if only one knew where to find it. But eventually I found that it was not like that. The problems of philosophy are not questions that have answers; they are knots in thought that need to be undone, and I have undone those that worried me.

Politics is the study of how to rule. It also affects deep questions and deep answers. But in reality it is never more than waist-deep. It is history, nothing more, and its theories are fragile edifices that simply fit the actions of mankind in particular places and particular times. They purport to find a deeper reality, but there is none to find.

What have I learned in these two disciplines, then? In philosophy: words are not reality. In politics: people may do anything, because they may believe anything.

If there is arcane and secret knowledge in the world, it is in economics. Everyone, from the smallest shopkeeper to the most powerful tyrant, is bound by its laws. It is the deep magic of the world. Many tell tales of it, but few begin to understand it. Of course in a sense it is not really magic; but to a sorcerer, what would real magic be? A matter of manipulating a reality that he understands better than those around him. The only difference between a sorcerer and the Chairman of the Federal Reserve is that in the sorcerer’s world, words and reality are intertwined. But we know that words are not reality: in our world, the two can only be brought together by human action.

How can economics be deep magic, when the human action it requires is in principle known to us? We can only understand how this can be because we know that the properties of a system can be hard to predict from the properties of its parts. Economics is the study of the system, not the parts, and thus it is the study of something shifting and unstable. Even the question of how the system may best be studied is still open. Thus, even though some properties of the system are known, no initiate of economics possesses complete knowledge; different schools form; many harbour false beliefs; and in the absence of knowledge some fall prey to ancient human weaknesses and become cranks or fanatics. And all the schools and cranks and fanatics find disciples among the uninitiated. But there is knowledge here, knowledge of deep truths that bind us all, of great currents that carry us like twigs in a storm, knowledge fragmented and much-obscured, but it is there.

This is the reason why economics has risen, in my mind, from poor relation to the other two disciplines to my de facto greatest interest. The area of my enquiry has narrowed from religion, to metaphysics, to the questions of human knowledge, and so down to the human mind, and then widened again to our interactions in the moral, and then the economic, sphere. At each stage I have been careless of detail, never stopping to become a scholar, always in pursuit of the deep questions. But now I feel I have reached a place where careful scholarship is needed — to untangle the threads of knowledge from the knot of concepts that is economics.